Abstract
One of the most important economic policy issues is the selection of exchange rate regime. The possible choices range from the hard peg to a freely floating nominal exchange rate. Since the early 1990s a move towards the two corners of the exchange rate regime spectrum has been observed, especially in Europe with the creation of EMU. The move towards the corners is discussed from the perspective of Mundell’s “impossible trinity” which states that among the three desirable objectives (1) stabilisation of the exchange rate, (2) free international capital mobility, and (3) an effective monetary policy oriented towards domestic goals, only two can be mutually consistent. Issues related to economic integration and EMU are reviewed, focusing on the famous question: Does one size fit all? Since monetary union raises some interesting issues of political nature, not present in other exchange rate arrangements, the paper ends with a discussion about some political aspects of monetary union.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
